Economic inequality and growth before the industrial revolution: the case of the Low Countries (14th-19th centuries) (original) (raw)

This article studies a collection of data on economic inequality in fifteen towns in the Southern and Northern Low Countries from the late Middle Ages until the end of the nineteenth century. By using a single and consistent source type and adopting a uniform methodology, it is possible to study levels of urban economic inequality across time and place comparatively. The results indicate a clear growth in economic inequality in the two centuries prior to the industrial revolution and the onset of sustained economic growth per capita. The results presented lend support to the " classical " explanation of inequality as the consequence of a changing functional distribution of income favoring capital over labor over the course of the early modern period. These findings provide an alternative resolution of the conundrum presented by " optimist " and " pessimists " interpretations of early modern economic development. . Inequality in history The growth of income inequality in many countries of the Western world over the last thirty years has significantly bolstered the centrality of inequality to debates in economics, social sciences, and policy making. Nevertheless, inequality's somewhat unexpected return to public consciousness and research agendas has confronted social scientists and policymakers alike with the finding that most knowledge of its fundamental causes and effects is still limited and often highly contested. As a result, many economists have turned to the past for more insight into the underlying logic of inequality movements through time. In particular, the long-term relationship between inequality and economic development has been central to much historical investigation. This strand of economic history has sought answers to the question whether inequality is good for economic development and has tried to do so by looking at the experience of the past two centuries. The current paper addresses the same issue of the relationship between inequality and economic development, but goes further back in time, and focuses on the long formative period of Western, capitalist economies. It aims to determine the extent to which pre-industrial levels of inequality were affected by economic development, and by the long-term emergence of a capitalist economy, and to consider how inequality might have influenced development itself. Several theories on the relationship between inequality and development exist for the modern era, but given the scarcity of sources that allow for the reconstruction of income and wealth inequality before the twentieth century, their applicability to the pre-and early industrial period is largely unclear. As is well known, the most influential modeling of the relationship between economic growth and inequality was presented first by Simon Kuznets in his 1954 presidential address to the American Economic Association (Kuznets 1955). Based on cross-sectional data on the level